The Skolkovo Foundation, which is creating an innovation center near Moscow, has signed partnerships with major Russian investors and several international funds. Investment officers emphasized that there is still plenty of room for other venture capitalists.

“The
Russian venture capital market is rather small,” said Alexander Lupachev, chief
Investment officer at Skolkovo, “We are interested in investors with experience
and a successful track-record.”

Read more:

The
Skolkovo Foundation provides grants and mentorship programs, and connects
entrepreneurs in Russia with more than 30 venture capital funds, ten of which
are international. With its venture capital partners, the Skolkovo Foundation
has invested around $40 million in 40 projects. The agreement with its partners
is to invest more than $350 million during next three years.

“I
view this partnership with Skolkovo as an opportunity for us to really find our
way to some of the best start-ups in Russia,” said David Cowan, a partner with
Bessemer. “We are like the paparazzi of entrepreneurship, we always want to be
looking where the action is and now we see it happening in Russia in a big
way.”

Cowan
said that Bessemer invests actively in Brazil, India, Israel and some parts of
Europe.

The
Skolkovo Foundation is looking to acquire more partners from U.S. and European
venture capital funds, as well as attracting Asian investors. Together with
Russian Venture Company and Rusnano Skolkovo, it will bring a group of venture
capital investors from Asia to begin negotiations in Russia.

Lupachev
said that a majority of the success stories at Skolkovo come from the IT
sector, but the foundation is planning to enter other sectors such as biotech
and green technologies.

Partnering
with Skolkovo, international venture capital funds get access to pre-selected start-ups
in Russia as well as a local partner who can oversee the projects. Some groups
such as $100 million DFJ-Aurora Fund have also opened up offices in Russia.

DFJ-VTB
Aurora is a joint partnership of DFJ Network and Russian investment banking
group VTB, which has offices in Silicon Valley and Moscow.

“We
want to use those famous Russian scientists that everybody knows exist but
nobody knows how to commercialize,” said Alexandra Johnson, managing director
of Moscow-based DFJ-VTB Aurora Fund. “We are long term investors and we are
willing to work with entrepreneurs as they progress.”

Johnson
said that some of the companies they invest in have teams of Russian engineers
but work in Silicon Valley if the product is more suitable for the American
market.

Other
venture capital firms are actively talking to Russian companies, including seed
fund 500 Startups, which runs a $29 million fund for emerging and early-stage
companies.

“There
is a lot of engineering talents in Russia,” said Dave McClure, a founding
partner of 500 Startups, “I definitely became aware of the size of the domestic
market in Russia.”

McClure
visited Russia twice in the fall of 2011 and is planning to start investing in
Russian companies within the next year. 500 Startups already invests outside of
the United States in some Eastern European countries as well as in Brazil,
India and China.

A
new Skolkovo resident is Zingaya, a company with a software development team in
Russia. The company provides a web-based alternative to toll-free numbers.
Zingaya has more than 100 clients, mainly in Russia, but this year it started
its U.S.-based operations. Just last year, the company got its first investment of more $1 million from Russian investors and a business angel Esther Dyson, who provided $50 thousand.

Dyson
is an angel investor who has been putting capital into Russian start-ups for
the past several years and is on the board of the Russian search engine Yandex,
which went public last May.

“There
is a lot of capital in Russia, many times companies think they need to go
abroad, but they are wrong,” Dyson said. “What is hard to find in Russia are experienced
managers.”

Dyson
said that Russia doesn’t have the kind of managerial talent that has grown a
business from start-up to mid-size enterprise.
American venture capital firms can offer the advice and management
support that not all Russian investors can offer, she said.

“It
is not easy to find money, but I think people focus too much on money and not on
the management,” continued Dyson. “It is a tough market for Americans. There is
a lot of competition and it is even tougher if you are a Russian coming to the
U.S. market.”